New Legislation To Impact PII?

By Richard Gledhill

As we move into 2017, we consider a number of issues arising late last year that could have an influence on the Professional Indemnity Insurance (PII) market for some law firms.

New Legislation To Impact PII?

The Chancellor’s Autumn Statement highlighted once again a couple of areas that solicitors, practising in the relevant discipline might wish to consider so as to ensure you do not suffer from a lack of options when your PII renewal comes around.

Whiplash Reform

We won’t repeat here the detail behind the proposed MOJ amendments, i.e. a banning of pre-medical offers, raising the small claims limit and the capping of minor whiplash claims, as we’re sure you’re all aware and will have seen the comment issued by Manchester Law Society back in November.

Why will this affect PII? For those specialising in Personal Injury claimant work, in particular, the appetite amongst Professional Indemnity Insurers, already limited in many cases, is likely to diminish further.

We do however foresee sufficient Insurer interest so as to maintain the availability of competitive options, albeit that this will in all probability be for those Personal Injury specialists able to provide a robust long-term business plan which demonstrates how that firm will be able to adapt to the proposed changes over the next three years or so.


Further penalties have been announced, targeting those businesses which enable another person or business to use arrangements designed to avoid or mitigate tax, where that arrangement might later be challenged and defeated by HMRC.

The PII market has already seen a negative impact as far as Accountancy and/or Tax or Financial Services professionals are concerned, with some lengthy additional information often being required. It is thus not inconceivable that PI Insurers might adopt a similar stance aimed at those law firms with a tax specialism.

Insurance Premium Tax (IPT)

Despite protestations from the insurance industry, in June 2017, IPT is to be increased for the third time since November 2015, taking the figure to 12% and meaning this tax will have doubled during this period. A significant additional cost outside the control of either yourselves or your Insurers but something you will need to budget for.


Finally, and not connected to the Autumn Statement, a legal decision within the Solicitors’ PI sector which you might find of interest, and which centres around dishonesty.

Briefly, solicitor Sharim Rahim of law firm O’Sullivan Last & Co faced claims by lenders Barclays and Heritable Bank for amounts exceeding £2M and £300K respectively. The PI Insurer, Arch, refused indemnity on the grounds that Rahim acted dishonestly.

In the appeal action taken against Arch by Rahim, Judge David Wakeman QC held in favour of the Insurer, allowing Arch to rely on the dishonesty exclusion. See web address for full details.

Download your copy: New Legislation To Impact PII?

Should you need any assistance with your PII programme or wish to discuss the above issues, please contact MFL Professional, as below.

This article does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to MLS members and solicitors. Specialist advice should always be sought
in any particular case.